RESEARCH BACKGROUND

In recent decades, large-scale land reclamation has become a popular way to create new urban areas around the world. These projects include the artificial island project of Lantau Tomorrow Vision, under which land reclamation will commence by 2025. However, the society has remained skeptical about the potential financial and environmental impacts of the project and its feasibility. As a global phenomenon of creating land for urban development in recent decades, large-scale land reclamation projects will be studied in this research to sort out and analyze their problems. This study may bring insights to Lantau Tomorrow Vision in the following ways:

▪ Large-scale reclamation projects around the world analyzed: The government and pro-government think tanks have referenced the “successful” projects abroad to rationalize Lantau Tomorrow Vision, but many large-scale reclamation projects around the world have fallen short of expectations, so we are obliged to review the large-scale land reclamation projects around the world, and systematically pinpoint the problems faced by them in common. These problems deserve more public discussion because they are very likely to reappear in Lantau Tomorrow Vision.

▪ Potential problems in planning and financial arrangements:

Given the unprecedented scale of Lantau Tomorrow Vision, the government has introduced new planning and finance strategies such as “planning during land reclamation”, public-private partnership, compartmentalized environmental impact assessments and green bond issuance. Yet many of these practices have failed elsewhere over the years. This study analyzes the potential problems of these strategies and predicts their impacts on Lantau Tomorrow Vision.

▪ As a reference for global ESG investment: Signs show that the government may issue green bonds and introduce emerging “eco-friendly” concepts to finance Lantau Tomorrow Vision. New land reclamation technologies have been touted by the government as “eco-friendly” as well. Yet, case study shows that many large-scale artificial island projects have caused serious environmental, social and governance problems which cannot be overcome by technologies alone. By studying the cases around the world, this study can help the public and the potential global investors better understand the actual environmental and social impacts of artificial island projects.

Methodology

This study covers artificial islands of at least 100 hectares in area and near-shore reclamations at least 400 hectares in size planned for residential, commercial, or tourism and recreational uses, all of which commenced and/or were officially put on hold between 1986 and 2022. In this study, we trace and outline the problems surrounding land reclamation projects by i) conducting keyword research, ii) analyzing the satellite images captured over the years, and iii) reviewing academic articles and media reports home and abroad.

Major Findings

Summary

▪ Large-scale reclamation projects are more likely to fail:

In this study, we identify 52 large artificial islands or near-shore reclamation projects that fit the scope of study. At least one type of problem related to the degree of completion (e.g. vacancy, delays for more than two years, or projects being stalled, abandoned or partially abandoned) is found in 24 of the 52 projects (46%). For the completed projects, five (20.8%) have high vacancy rates. Only one of the 13 projects with 1,000 hectares of reclaimed land has been fully completed, while ten (77%) projects involve problems in terms of degree of completion.

▪ Engagement of international consultants ended with mixed results:

This study finds that the participation of large global engineering consultancies in planning has been used by the governments around the world to rationalize large reclamation projects. Yet, their involvement is never a guarantee of project success. Nearly half of the projects (13 projects; or 45%) involving global consultancies have problems in terms of degree of completion. Some of them have various planning, environmental and engineering problems. Over the past decade or so, some large global consultancies have won contracts for large-scale infrastructure projects in Hong Kong. As a large-scale reclamation project about to begin, Lantau Tomorrow Vision is expected to involve the participation of those global consultancies.

▪ Geographical distribution:

Among the 52 projects that meet our criteria, 45 of them are located in Asia, particularly in East Asia (17 projects), West Asia (15 projects) and South & Southeast Asia (13 projects). A quarter of them (13 projects) are in the Mainland of China, and more than half of the projects in China have problems in terms of progress or high vacancy rates upon completion.

▪ Causing backlash across the globe: In spite of the global craze for land reclamation, projects have been met with local opposition around the world. This study finds that at least ten land reclamation projects have been met with local opposition; and four of them had to be stalled or trimmed due to public pressure. The reasons for the local opposition against land reclamation were mostly about the neglect of public opinion and needs, as well as the environmental and social impacts since project commencement.

▪ Development models:

Government-led projects take up the largest share of projects (22 projects; or 42%), followed by private-led projects (20 projects; or 38%) and those under public-private partnership (10 projects; or 19%). The average size of land reclaimed by public-private partnership projects (1,727 hectares) is much larger than those in government-led (872 hectares) or private-led projects (793 hectares), so large projects in recent years have often been financed through public-private partnership. Yet, 60% of the public-private partnership projects fell through, the highest among the three modes of development.

Common problems

In this research, we have identified five major problems faced by large-scale reclamation projects, namely planning problems, non-compliance issues, financial issues, environmental impacts and a construction issue.

NON-COMPLIANCE ISSUES

• Development procedures bypassed

• Financial malpractices

Environmental Impacts

• Increased water turbidity

• Coastal erosion and/or silting

• Chemical pollution

• Habitat destruction

• Flooding

Planning Problems

• Overlapping planning functions

• Dominance of luxury housing

• Lack of facilities for residents

• Projects suspended or downsized

Financial Issues

• Vulnerable to external economic risks

• Risk of government bailout

Overlapping planning functions

Dominance of luxury housing

1. PLANNING PROBLEMS

In some land reclamation projects, the planning objectives overlap with those in other development plans. This may lead to an oversupply of land and high vacancy rate in the reclaimed area.

Luxury housing often dominates public-private partnership projects. Under public-private partnership, the government has to give its planning rights as an incentive to the private developers. Since real estate projects have generated the most profit for private developers over the past decade or so, many public-private partnership projects have been dominated by luxury housing. In some projects, the proportion of land reserved for public use as promised by the government has been reduced because the planning rights have been ceded to the developers.

Lack of facilities for residents

Large reclamation projects are often carried out in areas far away from the city, but their transport or community facilities are by no way perfect, particularly immediately after project completion. As a result, urban residents and business activities are deterred from the newly developed area. Spaces may be left vacant, so the development plan may not achieve its initial objectives. In some projects, streets in the reclaimed area are often empty, as most property buyers are foreign investors.

Construction Issue

• Miscalculation of the rate of settlement

Projects suspended or downsized

Large-scale reclamation projects take years to complete. Changes to government policies or the economic environment can affect project continuity. Some land reclamation projects have therefore been on hold or demolished. Even if these infrastructure projects are complete, they may lose their economic basis because the economic downturn has caused a loss of potential buyers.

2. NON-COMPLIANCE ISSUES

Development procedures bypassed

Large-scale land reclamation projects may cause significant impacts, so they have to undergo much more complex procedures before gaining the required approvals. To save time, some legal procedures (mostly environmental impact assessments) may be skipped. In some cases, the actual nature of the projects may be concealed. The projects may be segmented for easier approvals, while information may not be disclosed in accordance with the law. This study finds that projects in which established procedures had been skipped were called off or fell through, but in some cases construction may still resume as tricks were used to dodge investigation.

Financial malpractices

Large-scale reclamation projects involve enormous potential interest. Some regions lack sound laws and regulations, so developers may rewrite the whole development plan and usurp state-owned land resources. There have also been alleged cases of financial malpractices such as misappropriation of funds in public-private partnership projects.

3. FINANCIAL ISSUES

Vulnerable to external economic risks

Risk of government bailout

The planning and economic projections for large-scale reclamation projects are often made during economic booms. As these projects often take a long time to complete, they may face greater risks of suspension, delay or downsizing when economic recessions or financial crises set in.

Large-scale reclamation projects require substantial funds. If the government cannot bear the cost of the project single-handedly, it often partners with private companies and shares both the costs and profits with them. Yet, it is often the government who bears the risks in public-private partnerships. When large-scale land reclamation projects like the construction of artificial islands fail, the government may have to bear an enormous financial liability.